Debit Cards Grow

In her recent article in Business Week, Mara Der Hovanesian cites a recent study published in the Nilson Report that points out that even though there are twice as many credit cards outstanding as debit cards, industry analysts expect that the debit cards will generate 16.5 billion in transactions (excluding ATMs) in 2003, up 22 percent over last year. She provides several reasons for the dramatic growth. First, consumers save time at the point of sale, and card issuers quickly replace lost or stolen cards. A major draw for consumers is the speed and convenience of paying with a debit card. Fast food outlets find that customers appreciate having handy "swipe and pay" machines at the checkout counter. Debit cards are increasingly popular for paying regular household bills, such as rent and insurance. Cable television companies have found that consumers readily arrange to have their bills paid by the debit card issuer. For example, Cox Communication has persuaded up to 20 percent of its 6.4 million customers to use a debit card to pay for its services. The Federal Reserve is expecting a 9 percent decline in cheeks written next year. Cash cards loaded with electronic dollars are also growing in popularity.